The relationship between contract administration problems and contract type

Published date01 March 2009
Date01 March 2009
AuthorBill Davison,Richard J. Sebastian
Subject MatterPublic policy & environmental management,Politics,Public adminstration & management,Government,Economics,Public Finance/economics,Texation/public revenue
Bill Davison and Richard J. Sebastian*
ABSTRACT. Guided by a conceptual model developed by Davison and
Wright, the research was conducted to determine which types of contract
administration problems (e.g., delays) were perceived as most likely for
seven types of contracts (e.g., small supplies and purchases). The survey
was sent electronically to all members of the National Institute of
Government Purchasing (NIGP). Postcards with the survey URL were also
distributed to a random sample of members of the Institute for Supply
Management (ISM). Data were obtained from 557 respondents. The results
for the perceived relationship of the occurrence of contract administration
problems for the various contract types provided partial support for the
conceptual model. The results also showed that construction contracts were
perceived as having the most problems overall and delay was perceived as
the most common contract administration problem. The implications and
limitations of the research are discussed.
The role of the procurement professional is rapidly changing from
a clerical function to a strategic participant, who is involved in the
major decisions regarding expenditure of funds (McCue & Pitzer,
2005). Procurement professionals must deal with changes in
technology, socioeconomic objectives, and legislation (McCue &
Gianakis, 2001). Public procurement professionals will need to
understand the theory and best practices of public procurement to be
successful in this new role.
* Bill Davison, CPPO, is Director of Purchasing, Stearns County, Minnesota.
His research interest is in contract administration. Richard J. Sebastian,
Ph.D., Professor, Department of Management, St. Cloud State University. His
research interests are in workplace aggression and abusive supervision,
civility, organizational and brand loyalty, determinants of status, and
contract administration
Copyright © 2009 by PrAcademics Press
In response to increasing demand for services, coupled with a
decrease in taxes, public organizations have flattened every aspect of
their hierarchal structure and required departments “to do more with
less” (Ancona, Kochan, Scully, Van Maanen, & Westney, 2005). The
procurement profession has responded to the “do more with less”
edict by increasing organizational efficiency by implementing E-
procurement technologies, such as, on line requisitioning and P-cards
(Drabkin & Thai, 2007). The adoption of E-Procurement technologies
has allowed the procurement department to transfer much of the
procurement clerical function to end users. (Bartle & Korosec, 2001)
This transfer has provided the procurement professional with the
opportunity to become a strategic partner, in all purchases, by
allowing them to apply their expertise to areas of the procurement
process where they can best add value, such as, developing Requests
for Proposals, performance based contracting, and contract
management (Schwartz, 2007).
To achieve the goal of becoming a strategic participant, the
procurement department will have to allocate carefully its scarce
human and financial resources to where they will be most effective.
To make effective resource allocation decisions, a framework based
on theory, research, and best practices will be needed.
The contractual goal of the procurement of any good or service is
successful project completion. Successful project completion is
defined, by the National Institute of Governmental Purchasing, Inc.
(NIGP), as successful procurement of the right item, in the right
quantity, for the right price, at the right time, with the right quality,
known as the “5 R’s” (Thai, 2007).
To complete a project successfully, contractual goals should be
established to accomplish each of the “5 R’s” (NIGP, 2000). The
establishment of contract goals begins with identifying the typical
contract risks and potential contract administration problems
associated with the purchase that could affect any of the “5 R’s”
(Davison & Wright, 2004).
By understanding the relationship between the contract type and
potential contract problems, procurement professionals can
anticipate the types of contract administration problems that are
likely to occur for a specific type of purchase. In turn this will allow
them to prepare effective specifications, contracts, and contract

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